facts & thought

In 2019, the ratio between stocks and commodities hit a 100-year low. As we end 2019, the ratio has contracted some but can shrink much more in 2020. Since 1979, inflation has remained muted. Given statements by Steven Kaplan, the President of the Dallas Reserve, that interest rates will remain low and the future of the dollar as the world’s reserve currency is questionable, the best trades for 2020 could be in commodities.

The Fear Of Missing Out (FOMO) appears to be showing up in recent days.

 $SPX and other major indices are roaring ahead, despite a relatively narrow number of stocks participating.
The seasonal period ("Santa Claus Rally" and the end of the post-Thanksgiving seasonal) runs through Friday, January 3rd. That doesn't mean the market will abruptly fall at that time, but it does mean that it won't have the benefit of seasonality after that date.
In summary, the outlook is bullish. A market like this can produce complacency, but that is the one thing we can control. We can and must avoid becoming complacent. But, for now, enjoy the ride.

The market could hardly be stronger.

Equity-only put-call ratios are in very overbought territory, but they haven't been able to generate strong sell signals (as yet).

Market breadth has improved, and breadth oscillators are on buy signals and are in modestly overbought territory.

Volatility remains in the bullish camp. First, the $VIX "spike peak" signal from December 4th remains in place. Second, the trend of $VIX is sideways-to-down, and that is bullish as well.

In summary, we are bullish based on the indicators. However, the massive number of overbought conditions is once again worrisome, so we would not ignore sell signals, should they appear. Meanwhile, tighten trailing stops where appropriate and enjoy the ride while it lasts.